First institutional investor group-led climate shareholder proposals filed in Japan

Three major institutional investors representing US$3 trillion of assets under management  -- Man Group, the world’s largest publicly traded hedge fund company, Amundi, Europe’s largest asset manager, and HSBC Asset Management -- announced today their co-filing of a set of three shareholder proposals at Electric Power Development Co., Ltd, known as J-Power, urging the company to strengthen its decarbonisation strategy.

The proposals, co-filed with Australasian Centre for Corporate Responsibility (ACCR), call on J-Power, the largest coal plant operator in Japan, to set credible emissions reduction targets and disclose plans to achieve them.

This first-ever institutional investor group backed set of proposals seeks to protect J-Power’s long-term value given the risks and opportunities associated with the global shift away from fossil fuels, and marks an important milestone in sharply rising investor engagement on climate change in Japan.

The filing follows months of engagement between J-Power and the investor group, about concerns that J-Power’s current decarbonisation strategy, dubbed Blue Mission 2050, would see the company lose competitiveness as Japan moves to cut greenhouse gas emissions to net zero by 2050. These concerns, along with concerns about the feasibility and cost of coal-based technologies J-Power plans to deploy, are highlighted in analysis released today by TransitionZero. Japan’s current energy crunch also underlines the need to diversify away from reliance on imported fossil fuels to domestic renewable energy and storage.

Jason Mitchell, Head of Responsible Investment Research at Man Group said, “As Japan’s largest coal power operator, J-Power is uniquely placed to lead the sector in setting a clear decarbonisation strategy with Paris-aligned, company-wide targets. We welcome the company’s 2050 carbon neutrality commitment, but as shareholders we recognise the need for credible near-term targets and reassurance that future investment is consistent with those targets and will not over-rely on coal-based technologies at risk of stranding.”

The proposals call on J-Power to set a business plan and short- and medium-term emissions reduction targets aligned with the goals of the Paris Agreement, disclose how it assesses the alignment of future capital investment against those targets and how its remuneration policy incentivises the company’s executives to work towards its climate goals.

Although J-Power has set a ‘carbon neutrality’ 2050 ambition, its current targets fall short of those required by the Paris Agreement and do not cover emissions from its growing operations outside Japan.

Sachi Suzuki, Senior Stewardship Specialist at HSBC Asset Management added, “Long-term investors in J-Power see its corporate value dependent upon a credible plan to decarbonise. We are concerned by their focus on a high-cost, coal-based strategy, relying on speculative technologies without a clear plan for coal retirement, instead of more credible near-term action.”

Caroline le Meaux, Head of Engagement, Voting Policy and ESG Research at Amundi added, “Given the high emissions from J-Power’s coal power business, and the low level of economic and technical feasibility attaching to technologies detailed in the company’s Blue Mission 2050, the current direction of travel is highly concerning.  The decrease of gross emissions should be prioritised.  We consider that corporate value would be better protected with greater disclosure of how the company, which we hold in some passive funds, will align its business plan and capital expenditure with Paris-aligned decarbonisation targets.”

The J-Power shareholder proposal builds on the growing momentum in Japan behind shareholder action since the first climate-related proposal was filed in 2020 against Mizuho Bank.

Brynn O’Brien, Executive Director at ACCR said, “The decisions that need to be taken to set companies up to thrive in a decarbonised world need to be taken by the company boards and executives of today, not deferred to future leadership. Every major emitter in every economy needs a credible, detailed business plan consistent with the goals of the Paris Agreement. J-Power’s current strategy would see shareholder capital wasted to prolong the life of the company’s coal-fired power generation business. Supporting these resolutions would be the start of a stronger future for J-Power.”

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Background

About HSBC Asset Management

HSBC Asset Management, the investment management business of the HSBC Group, invests on behalf of HSBC’s worldwide customer base of retail and private clients, intermediaries, corporates and institutions through both segregated accounts and pooled funds. HSBC Asset Management connects HSBC’s clients with investment opportunities around the world through an international network of offices in 25 countries and territories, delivering global capabilities with local market insight. As at 31 March 2022, HSBC Asset Management managed assets totalling US$618bn on behalf of its clients. For more information, see www.assetmanagement.hsbc.com/uk. HSBC Asset Management is the brand name for the asset management business of HSBC Group, which includes the investment activities provided through our local regulated entity, HSBC Global Asset Management (UK) Limited.

About Man Group

Man Group is a global, technology-empowered active investment management firm focused on delivering alpha and portfolio solutions for clients. Headquartered in London, we manage $151.4 billion* and operate across multiple offices globally. We invest across a diverse range of strategies and asset classes, with a mix of long only and alternative strategies run on a discretionary and quantitative basis, across liquid and private markets. Our investment teams work within Man Group’s single operating platform, enabling them to invest with a high degree of empowerment while benefiting from the collaboration, strength and resources of the entire firm. Our platform is underpinned by advanced technology, supporting our investment teams at every stage of their process, including alpha generation, portfolio management, trade execution and risk management.

Our clients and the millions of retirees and savers they represent are at the heart of everything we do. We form deep and long-lasting relationships and create tailored solutions to help meet their unique needs. We recognise that responsible investing is intrinsically linked to our fiduciary duty to our clients, and we integrate this approach broadly across the firm.

We are committed to creating a diverse and inclusive workplace where difference is celebrated and everyone has an equal opportunity to thrive, as well as giving back and contributing positively to our communities. For more information about Man Group’s global charitable efforts, and our diversity and inclusion initiatives, please visit: https://www.man.com/corporate-responsibility

Man Group plc is listed on the London Stock Exchange under the ticker EMG.LN and is a constituent of the FTSE 250 Index. Further information can be found at www.man.com
*As at 31 March 2022. All investment management and advisory services are offered through the investment “engines” of Man AHL, Man Numeric, Man GLG, Man Solutions / FRM and Man GPM.

About Amundi

Amundi, the leading European asset manager, ranking among the top 10 global players^[1], offers its 100 million clients - retail, institutional and corporate - a complete range of savings and investment solutions in active and passive management, in traditional or real assets.

With its six international investment hubs^[2], financial and extra-financial research capabilities and long-standing commitment to responsible investment, Amundi is a key player in the asset management landscape.

Amundi clients benefit from the expertise and advice of 5,300 employees in 35 countries. A subsidiary of the Crédit Agricole group and listed on the stock exchange, Amundi currently manages more than €2.0 trillion of assets^[3].

Amundi, a trusted partner, working everyday in the interest of its clients and society.